The Ukraine conflict has added a big layer of uncertainty on top of slowly recovering oil markets, major Danish tanker owner Torm said in fourth-quarter financial results on Wednesday.
“In recent months, global oil demand has returned to 2019 levels, and we have seen improved freight rates, but also volatility that may be reinforced by the Russian invasion of Ukraine,” the company’s executive director Jacob Meldgaard said in a press release.
Recovery towards the end of 2021 helped the owner and operator of 84 product tankers narrow its net loss to $8.2m in the fourth quarter of that year, compared to a loss of $40m in the same period of 2020.
It is far from certain, however, how things will move forward, the New York and Copenhagen-listed company said. The initial sanctions against Russia, which invaded Ukraine, may not be targeting the oil trade but the market has been disrupted nevertheless due to uncertainty and potential for re-routing of trade flows, it added.
According to the Torm report, “increased volatility” is expected now in everything, from freight rates and bunker costs to foreign exchange rates and vessel values.
The company, however, pointed out that it did not see “any direct impact” on its operations yet “considering our current customer base, main suppliers and financial counterparties as well as covenants in our loan facilities”.
Rising values
For the full year of 2021, Torm booked a net loss of $42.1m, compared with an $88.1m profit in 2020.
The company will therefore distribute no payout to shareholders, in line with standard dividend policy.
As of 31 December, Torm owned 43 MR tankers on the water, as well as 10 LR2s, nine LR1s and two handysizes. The company also operates four LR2s and 16 MRs in chartered-in and sale-and-leaseback arrangements.
Brokers valued Torm’s ships at $1.93bn as of the end of December. That was $40m higher than their value estimate at the end of the third quarter of 2021.
As of 31 December, Torm had scrubbers installed on 51 of its ships and plans to do the same on six more before the first quarter of 2023.
